Nick Shields: Global Labor Production, November 7th, 2008. 3:26 pm.
Although China has 2 trillion U.S. dollars of foreign reserves, a budget surplus and a controlled capital market, they are still feeling limited impact from the financial crisis. Demand from it's biggest markets, like North America and Europe is weakening. This is leading China's real economy in the export sectors into a rough time. Many export enterprises on China's coast are now struggling due to higher labor costs and lower orders from foreign customers.
Many toy factories in China's Guangdong province were shut down from January to July. Last month, two big toy manufacturing companies were shut. As a result, 7,000 workers lost their jobs. The company was also suspended from trading, which caused it to face a severe shortage of current funds. Wang Dewen, a labor economist from China Academy of Social Sciences stated that "The greatest impact is on these labor-intensive, small and medium-sized export provinces." These export oriented enterprises are China's major employers, employing 70 percent of the 20 million new jobs every year. Wang also said that migrant workers who are the biggest source of employees in the export enterprises, would suffer from unemployment.
China was once hoped to be the saving net for the global financial crisis, and it's economy still might stop the crisis from becoming worse. However, this new development shows that they are not invulnerable to the crisis. The lessening demand from the other world markets like North America really effect the Chinese economy. They have a trillion dollars in foreign reserves, however, they still face large unemployment rates. The strain that is being put on their export industry and the jobs that are being lost could slow the economic growth of China that some had begun to wonder when it would.
http://news.xinhuanet.com/english/2008-11/01/content_10293305.htm
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